Hmmm. I wonder why he is not providing any figures on how much is in demand and how much he is producing. Then compare his production rates of this crisis with a year ago. My bet is that they are making more ammo than ever before but the amount more isn't very great. Nope, we may not like the answer but at least we would know the facts. After his film, we still don't have any facts and this obvious omission of data does nothing but cause the shooting community to be more skeptical about the claims of the major ammo manufacturers.
LR1955 Wrote:Hmmm. I wonder why he is not providing any figures on how much is in demand and how much he is producing. Then compare his production rates of this crisis with a year ago. My bet is that they are making more ammo than ever before but the amount more isn't very great. Nope, we may not like the answer but at least we would know the facts. After his film, we still don't have any facts and this obvious omission of data does nothing but cause the shooting community to be more skeptical about the claims of the major ammo manufacturers.
LR55
That would likely be a violation of federal securities laws.
The way to get primers from midway is to put them on back order. Back orders are filled first.
If you put them in your cart, it takes action on your part to complete an order. By the time you can accomplish that, the entire stock has been depleted via back orders.
GooseGestapo Wrote:The way to get primers from midway is to put them on back order. Back orders are filled first.
If you put them in your cart, it takes action on your part to complete an order. By the time you can accomplish that, the entire stock has been depleted via back orders.
55, I did a little digging around in their latest quarterly SEC filing and it does become pretty apparent that they are producing more but very little more. It's tough to get concise numbers because some data is presented for "Ammunition" while other data is presented for "Shooting Sports", with ammo being a 70% subset of the latter.
In the 3 months ended 9/30/20, ammo sales were $272m vs $210m in the like quarter of 2019. Total Shooting Sports sales were $379m vs $300m in 2019, so ammo was up $62m while Hunting and Shooting (the other subset of Shooting Sports was up $17m or so. They don't breakout gross profit for ammo.
But here's where I switch to my Ed Norton narrating Fight Club voice: Ladies and Gentlemen fasten your seatbelts. Gross profit was up $54m in shooting sports. So $54m of that $79m sales increase in Shooting Sports went straight to the gross profit line. It's impossible to tell beyond that how much comes from volume and pricing since year over year baseline volume will be sold at the higher price, but a best guestimate is that about 70% of the sales increase is from price (54/79) since so much is dropping to the profit line (reducing costs can also have an impact). Purely guesstimating again, if 70% of the $62m of ammo sales increases was price, volume represents around $18m, or a bit under a 10% volume increase (based on the $210m 2019 sales number).
And to quell any of the talk of "secret warehouses", inventories of finished goods on hand for the entire company (which also includes Outdoor Products) were down slightly. To hide inventory or sell it undisclosed to related parties would be securities fraud on par with some of the things Enron did.
12-21-2020, 12:20 AM (This post was last modified: 12-21-2020, 12:46 AM by LR1955.)
SH:
Sorry -- I posted this one as you posted yours.
You have informed us more than those who are running the firearms and ammunition companies.
First bit of quantifiable information I have found. And it makes sense.
No, they probably won't make you their Public Affairs guy after all. It is pretty damning.
From what I recall from my Business degree, the most efficient companies are the ones who maximize their production with demand.
I doubt any ammo company will invest in more capital goods because once this is over, said equipment would be idle. Also, with Biden on the horizon the risk of more capital investment is probably too high.
Thank you for the info and assessment - not easy to find and you found it.
I don't think it's that damning. This time last year they were marginally profitable and their stock was probably trading around book value. Half the people who are complaining about the lack of ammo and prices now were buying Serbian, Korean, Phillipines, Brazilian, Russian, etc. imports for a few cents a round less, with the price differential largely driven by not only cheaper labor costs, but likely far cheaper employee safety costs. Now those imports have completely evaporated and it's Vista's responsibility to pick up the slack?
GooseGestapo Wrote:The way to get primers from midway is to put them on back order. Back orders are filled first.
If you put them in your cart, it takes action on your part to complete an order. By the time you can accomplish that, the entire stock has been depleted via back orders.
Back orders are filled and sent automatically.
This would be great, if primers were backorderable @ Midway. They are not and haven't been for 6 months or so.
StoneHendge Wrote:I don't think it's that damning. This time last year they were marginally profitable and their stock was probably trading around book value. Half the people who are complaining about the lack of ammo and prices now were buying Serbian, Korean, Phillipines, Brazilian, Russian, etc. imports for a few cents a round less, with the price differential largely driven by not only cheaper labor costs, but likely far cheaper employee safety costs. Now those imports have completely evaporated and it's Vista's responsibility to pick up the slack?
SH:
I am sure some think it is Vista's responsibility but I don't. I am sure they are producing at max or near max. And I am sure they won't be investing in any more capital goods because in four or six months this will be over and they will either be legislated out of business or the demand will drop back to their normal capabilities. Just wish they would be up front about it and quantify their statements with numbers.
Thanks again for your insight into this. Good stuff.
A $62 million Quarterly Y2Y jump in ammo for one company is unprecedented. Thats crazy money for ammo, since were not talking high price-point products.
Once that graph gets filled for 2020, were going to see a hockey stick that will make 2013/post-Sandy Hook look like a walk in the park.
I agree that the US ammo manufacturers probably won't invest a huge amount into new equipment and buildings for what they see as a short-term issue. Although many people on this forum are high-volume shooters, most firearm owners are not. I know hunters that normally buy one or two boxes per year. That group suddenly buying even five boxes each has a huge increase on overall demand. They probably won't be buying more for a few years.
The lead time on specialized manufacturing equipment tends to be in the two-to-three year range anyway. It is usually not made in-house. It sounds like what the ammo factories have been doing is ramping up to 24/7 production to fully utilize what equipment they have. It takes time to do this and not have massive quality control problems. Some facilities push existing employees to 7 day workweeks for period of time, but at some point, they need to add shifts. It is big deal to switch a 3-shift operation to something else for long term 24/7 manufacturing.
When one component is a limiting factor, they might expend extra effort on that. On the other hand, I think that it is easy to understand why they would be especially cautious about something like primer production and not dare half-ass additional capacity here.
What really affects the ability to increase short term production is the original utilization rate of the equipment during "normal" times. It is not uncommon for the expense of specialized manufacturing equipment to be significantly larger than that of the labor needed to run it. The profit margin in these cases depends largely on being able to run the machine as much as possible with as little down-time as possible. When I worked in (non-union) factories that made automotive components, expensive new equipment was projected to run a bit more than 5 days per week, 24 hours per day. The highest profits for a 3-shift operation were actually 7 days per week, paying overtime. It was not uncommon for our people to work 7 days per week for a few months if demand was higher than anticipated. It could be grueling. It surprises some people that profits were higher even when paying overtime, but the increased utilization of equipment was a big part of that. It also makes a little more sense when you realize that that overtime take-home pay for employees is only part of the labor expense. At my facilities (admittedly a number of years ago) benefits like medical, worker's comp, disability and retirement, stayed the same for a 5, 6, or 7 day work week. When this is taken into account, the factory paying time-and-a-half overtime after 40 hours did not greatly change the overall hourly expenses. Depending on the equipment used, paying double time would often still yield higher profits.
